2018 (11) TMI 1745 - AT - Income Tax

Maintainability of appeal - low tax effect - HELD THAT - It is clarified that that monetary limit of 2O lakhs for filing appeals before the ITAT would apply equally to cross objections under section 253(4) of the Act. Cross objections below this monetary limit already filed should be pursued for dismissal as withdrawn/ not pressed. Filing of cross objections below the monetary limit may not be considered henceforth. Similarly references to High Courts and SLPs/ appeals before Supreme Coon below the monetary limit of- 50 lakhs and 1 Crore respectively should be pursued for dismissal as withdrawn/ not pressed. References before High Court and S appeals below these limits may not be considered henceforth. This Circular will apply in SLPs/appeals/cross objections/ references -; be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospects ;. to pending SLPs/ appeals/ cross objections/ references. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed - Appeal filed by the Revenue is therefore dismissed.

Summary

Issues Involved:
1. Monetary threshold for filing appeals before ITAT.
2. Definition of "tax effect" for determining appeal eligibility.
3. Guidelines for filing appeals based on tax effect limits.
4. Exceptions to monetary limits for specific issues.
5. Instructions for maintaining judicial folders for appeal evidence.

Analysis:
1. The judgment addresses the monetary threshold for filing appeals before the ITAT, emphasizing the recent instruction by the CBDT revising the tax effect limit to ?20 lakhs. The CBDT Circular specifies that appeals should not be filed solely based on exceeding the monetary limits but rather on the merits of the case. The tax effect is defined as the variance between assessed and chargeable tax, including surcharge and cess, excluding interest unless its chargeability is in dispute.

2. The Circular further instructs that the tax effect should be calculated separately for each assessment year concerning disputed issues. Appeals can be filed for years exceeding the monetary limit, with exceptions for composite orders involving multiple years. Notably, in cases of penalty orders, the tax effect refers to the quantum of penalty altered in the order under appeal.

3. Exceptions to the monetary limits include contesting adverse judgments on constitutional validity challenges, illegal Board orders, accepted Revenue Audit objections, and undisclosed foreign assets. The judgment clarifies that writ matters and other direct tax issues are not bound by the specified monetary limits. Additionally, for cases with unquantifiable tax effects, such as trust registrations, appeal decisions should be based on individual case merits.

4. The Circular also addresses the filing of cross-objections and references to higher courts below the specified monetary limits, emphasizing the pursuit of dismissal for those cases. It is highlighted that the Circular applies to pending appeals and should be followed retrospectively. The judgment concludes by dismissing the Revenue's appeal based on the revised tax effect limits, underscoring the importance of adhering to the CBDT Circular for appeal eligibility.

5. Lastly, the judgment emphasizes the necessity of maintaining judicial folders systematically to provide evidence for not filing appeals due to the Circular's monetary limits. It underscores the importance of documenting decisions regarding appeal filings to prevent misinterpretation of the Department's stance on disputed issues.